Developer of slots-hotel project wanted city to pay for new garage in Worcester

Sunday

Sep 8, 2013 at 6:00 AMSep 8, 2013 at 9:18 AM

By Thomas Caywood TELEGRAM & GAZETTE STAFF

WORCESTER — In late March, private developers quietly proposed that the city build a fifth municipal parking garage at taxpayer expense to serve a downtown hotel pitched as part of an ill-fated plan for a slots parlor in Kelley Square.

That revelation, found on the third page of a previously unreleased proposed host community agreement between City Hall and Mass Gaming & Entertainment LLC, a subsidiary of Chicago-based Rush Street Gaming, comes as the city moves to overhaul its struggling parking operations.

The proposed agreement to add a fifth public garage to the city's already money-losing stable of downtown garages, lots and parking meters is dated March 28, 2013, one day after the developers met with city councilors in a series of private meetings at City Hall.

The document was never signed by either party, and two members of the City Council's Traffic and Parking Committee said this past week that they had never heard anything about it until contacted by a reporter for this story.

Rush Street Gaming later took its plans for a slots parlor next door to Millbury, where a signed host community agreement between Mass Gaming and Millbury was scheduled to go before the town's voters later this month until a lack of public support forced the company to pull out of that community as well.

The Telegram & Gazette received a copy of the proposed host community agreement between Mass Gaming and Worcester as part of a packet of materials obtained from the city under the state Public Records Law.

The 11-page document, labeled a "corrected draft," contains language about the parking garage under a section dealing with a proposed downtown hotel sought by city officials as part of the slots project.

Hotel developer Richard L. Friedman of Cambridge initially proposed building a $40 million full-service hotel downtown with 150 to 200 guest rooms, a project that would have been subsidized by the slots parlor in Kelley Square.

The developers later dropped the hotel from the slots parlor plan, which then fizzled by early June.

The draft agreement from March stipulates the city would build at its own expense a parking garage for the proposed downtown hotel and provide to its staff and patrons, at no cost to the hotel, 1.2 parking spaces per hotel room. That works out to between 180 and 240 free parking spaces, based on Mr. Friedman's description of the hotel project at the time.

The document goes on to specify that construction of the hotel would begin either four months after the city finishes building the garage or four months after construction began on the slots parlor, whichever was later.

City Manager Michael V. O'Brien said the proposed host community agreement was a starting point drafted by Rush Street Gaming and never seriously considered by the city.

"It never advanced beyond that," Mr. O'Brien said. "My reaction was that we need more specifics. As much as they thought they included in their draft, we were looking for much more in terms of specifics."

Mr. O'Brien noted that the CitySquare development plan has long called for the city to build an underground garage off the recently reopened section of Front Street, but only when confirmed private construction plans in the area warranted the garage project — a situation that may be many years in the future depending on economic conditions.

Councilor-at-large Frederick C. Rushton, chairman of the Economic Development Committee and a member of the parking committee, said it seems to him the slots-hotel developers may have erroneously assumed the CitySquare garage construction would be triggered quickly by their downtown hotel plans and that a large chunk of the parking spaces would be simply turned over to them.

A spokeswoman for Rush Street Gaming declined to comment on the document or the city's position that it was drafted by the developers.

The city's parking operations, including four publicly owned garages, have lost roughly $900,000 and counting over the last four fiscal years, prompting moves toward a major overhaul of how the city garages, lots and parking meters are managed.

Meanwhile, the city may get slapped with a parking-related lawsuit from a downtown hotel that was built, the Hilton Garden Inn on Major Taylor Boulevard, for failing to deliver a promised pedestrian bridge from the hotel to the Major Taylor Garage and the convention center.

The city dropped plans to build the pedestrian bridges after the expected construction cost ballooned from $2.5 million to $8 million. The hotel's owner, Monarch Enterprises of Springfield, has withheld roughly $700,000 in parking fees due to the city in response.

Mr. O'Brien said the two sides are still in talks in the hopes litigation can be averted.

"We have to come to terms with Monarch. I think we both recognize the challenges and opportunities and are looking forward to putting it behind us," Mr. O'Brien said.

Monarch President Paul C. Picknelly did not return a call seeking comment.

Given that two of the four municipal garages downtown have struggled to attract customers and revenue, it came as a shock to District 1 Councilor Anthony J. Economou, who represents parts of the West Side and North Worcester and is chairman of the parking committee, that a fifth garage would have been up for discussion as part of the slots-hotel proposal.

"In my opinion it doesn't make business sense to build another garage if you've got four garages and two are near capacity, one is only half full and the fourth isn't making the grade right now," Mr. Economou said. "That tells me we have excess capacity. If you have excess capacity, you don't add more capacity."

Mr. Rushton said he's confident the CitySquare development will eventually make a fifth city parking garage feasible and necessary.

"I do expect we will be building an underground garage down there, hopefully in the next few years," he said.